A famous anomaly in stock returns is the Post-earnings announcement drift (the PEAD anomaly). The PEAD occurs

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A famous anomaly in stock returns is the Post-earnings announcement drift (the PEAD anomaly). The PEAD occurs after a company announces its earnings. The share prices of firms whose announced earnings exceed those predicted by analysts rise at the announcement and continue to rise on average for up to 3 months following the announcement. Conversely, the share prices of firms whose announced earnings are below those predicted by analysts fall on the earnings announcement day and continue to steadily fall on average for up to three months. Assuming earnings surprise have no obvious effect on risk, does the PEAD anomaly appear to violate market efficiency?

Posted Date: May 11, 2024 04:03 AM

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A famous anomaly in stock returns is the Post-earnings announcement drift (the PEAD anomaly). The PEAD occurs

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The PostEarnings Announcement Drift PEAD anomaly appears to contradict the efficient market hypothesis EMH in its weak form which suggests that all pa... View the full answer

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